Hitting And Missing The Point

David Wilson at Bloomberg has an interesting take on nanotech – but it really is the same old story. Good companies make good investments, whether as a shareholder or a VC, and whether they are nanotech or any other tech, it takes more than technology to excite the financial markets. Altair should know, they have been putting out a press release every couple of weeks for about ten years which has taken their stock price from nine dollars to three. I suppose that explains why Warren Buffett bought BusinesWire instead of Altair.

Nanotechnology companies were all the rage in the U.S. stock market three years ago. The idea of working with particles smaller than 100 nanometers, or one 10-millionth of a meter, was enough to draw investors. Now it takes backing from the likes of Lockheed Martin Corp., the world’s largest defense company, and AES Corp., a power producer, to get them excited even for a day.

Shares of Lumera Corp. surged 24 percent yesterday after the Bothell, Washington-based company signed an agreement to provide electro-optic materials, used in electronic equipment, to Lockheed Martin. Terms weren’t disclosed.

The announcement was made a week after Altair Nanotechnologies Inc., a Reno, Nevada-based provider of nanotechnology for batteries and other products, said AES purchased a 1.5 percent stake for $3 million.

Altair’s shares advanced 7.4 percent on the day of the disclosure. They have since fallen 14 percent to $3.24, less than the $3.35 a share that AES agreed to pay.

This isn’t an isolated case. A nanotechnology index compiled by Merrill Lynch & Co. has lost 4.4 percent this year. Sixteen of its 25 members have dropped, including Lumera, which tumbled 40 percent before its rally.

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